8 Tax Tips for McHenry County Homeowners
Tax is in the air—everyone is officially in “tax mode” so here is a quick checklist of some tax breaks and benefits of owning a home.
Here at Glacier Realty, we do more than help you buy and sell your home. We build long-lasting relationships with our clients that endure all seasons of life. We love to share information to help you navigate home ownership, even after closing. With tax season here, our team is here to help again.
In this resource:
According to TurboTax, more than 45 million of us itemized deductions totaling $1.2 trillion dollars’ worth of tax deductions. But for those that claimed the standard deduction, you may have shortchanged yourself.
With millions of dollars unclaimed, our team compiled a shortlist of tax deductions for homeowners.
Be sure to check out the additional resources at the bottom of this article.
If you have any questions about what you can and can’t deduct, take some time to consult with a trusted McHenry County tax professional.
1. Mortgage Interest
If you have a mortgage on your home, you can take advantage of the mortgage interest deduction. Exactly how much depends on your filing status so make sure you talk to a tax professional if you’re unsure about how much you can deduct.
2. Home Equity Loan Interest
If you took out a home equity loan or line of credit in 2022, you might be able to deduct the interest paid during the year. However, you can only claim this tax break if you itemize your deductions and used the money to buy, build or substantially improve the home. According to tax experts, good examples are HVAC improvements or replacements, remodels, and new roofs.
3. Property Taxes
Owning a home means property taxes, but did you know you can deduct up to $10,000 of property taxes as a married couple filing jointly or $5,000 if you are single or married filing separately? The state and local tax (SALT) deduction requires you to itemize deductions so be sure you work with an expert if you’re unsure.
4. Did you sell a property in 2022?
Home prices grew year over year in the third quarter of 2022, making it a good year for home sellers.
Even better, if you were using the home as your primary residence for two of the last five years, and sold the home for a profit, you might be able to qualify for a capital gain tax break.
If you do have to pay taxes on some of your home sale profits, expenses used for selling your home – such as legal fees, advertising expenses, and real estate agent commissions – can reduce your capital gains tax.
5. Energy Efficiency Improvements
Homeowners can claim a federal tax credit for 10% of the cost of insulation materials and other energy-efficient improvements, such as energy-saving windows and doors. There’s also a $300 credit for purchasing efficient heating and cooling equipment.
6. Medically Accessible Homes
Most home repairs and improvements do not qualify as a tax deduction, however, if you have to make permanent improvements to make your home more accessible for medical reasons, it could qualify. A few examples might include installing medical equipment, railings, or widening doorways.
7. Moving Expenses for Military Personnel
Not only are you dedicated to our country’s freedom, but you’re also due to deduct relocating expenses if you didn’t receive reimbursement from the government for the move. You can learn more about this deduction and other savings reserved for active military personnel here.
8. Home Office Expenses
If you run a business out of your home, (not working from home for your employer), you may be able to deduct some of the expenses of maintaining that workspace. The IRS has specific rules for what qualifies, but if your situation meets the criteria, the deduction can be quite valuable.
A Taxpayer’s Guide to Property Tax Relief (McHenry Township Assessor)
The 10 Most Overlooked Tax Deductions (TurboTax)
8 Tax Deductions for Homeowners: Your Breaks and Benefits (Rocket Mortgage)
Clean Energy for All (U.S. Federal Government website)